SEC Delays Decision on Grayscale’s Ether Futures ETF


The United States Securities and Exchange Commission (SEC) has once again deferred its decision on the approval of digital asset management firm Grayscale’s Ethereum Futures Trust exchange-traded fund (ETF).

The SEC announced on March 22 that it would extend the deadline for deciding on Grayscale’s proposed ETF, which focuses on investing in Ethereum futures contracts, from March 31 to May 30.

As reported earlier by TheCoinRise, the SEC recently also delayed its decision on the spot Ether ETF application filed by asset management firm VanEck.

SEC Explains the Reason for the Delay

Explaining the rationale behind the extension, the commission stated, “The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

This extension marks another delay in the approval process, following a similar postponement in December 2023. At that time, the SEC decided to gather additional public input before making a determination on whether to list Grayscale’s futures ETF product.

Grayscale’s ‘Trojan Horse’

Grayscale’s maneuvering in the ETF space has drawn attention and speculation from industry observers. 

Bloomberg ETF analyst James Seyffart suggested that Grayscale might be using its futures ETF application as a “trojan horse” to influence the SEC’s decision to approve its spot Ether ETF. If the futures ETF were to be approved, Seyffart explained, it could pave the way for Grayscale to argue for approval of its spot Ether ETF application.

SEC and Crypto ETFs

The SEC’s handling of cryptocurrency ETFs has garnered increased scrutiny, particularly following the approval of spot Bitcoin ETFs in January. 

With the delay in deciding on Grayscale’s Ethereum ETF and the opening of the spot Ether ETF application to public comments on January 25, uncertainty looms over the regulatory landscape for crypto-based ETFs.

Grayscale is not the only asset management firm facing hurdles with Ethereum ETFs. The SEC also announced delays in its decision on applications from BlackRock for its iShares Ethereum Trust and Fidelity for its Ethereum Fund in separate filings on March 4.

Letter from Senators

Two United States senators, Jack Reed and Laphonza Butler, sent a letter to the SEC, stating that there are “enormous risks” that retail investors would face if the regulator greenlights the additional spot crypto ETF applications.

Reed and Butler cautioned against the approval of spot ETH ETFs, warning of the susceptibility of thinly traded cryptocurrencies to schemes like pump-and-dump operations.

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